Jola Cloud Solutions' Blog

The hosted voice market has become extremely competitive but resellers can avoid joining the ‘race for the bottom’ on price by choosing a technology partner that helps them to differentiate. Very few suppliers understand the needs of both their channel partners and their end business customers.

More for less

A good example is handsets. With thousands of devices capable of being connected to cloud voice systems, businesses are looking for help to select models that exactly meet their requirements at the right price.

A Polycom VVX 600 costs around £100 more than the VVX 411 but if your staff need to use a headset it can work out cheaper. This is because the VVX 600 is Bluetooth enabled so compatible with hundreds of devices. A good quality monaural Bluetooth headset costs less than £20, compared to around £200 for a good quality wired headset. In addition, it has the benefit of not being tethered to the desk phone, giving users the freedom to roam around the office.

Whether you are a small company looking to grow your business or a large company looking for market dominance, you will need sound planning, consistently astute decision making and successful execution to achieve your goals.

Growth strategies are numerous and diverse but in general the three ways to build a business are; through sales, by buying other companies, or by buying their customers.

To build or to buy?

Both strategies present risks and trade-offs which need to be fully analysed and addressed before progressing.

Inorganic Growth 

This roll-up model is best suited to industries that rely on recurring revenues. Whether you are buying the whole company or just their customer contracts, the objective is to buy them for less than the terminal value of the combined group. In industries like telecommunications where resellers are valued on multiples of gross margin, it is common for suppliers to buy their resellers for the margin improvement created when a link in the chain is removed.

A sudden shift in size presents multiple challenges such as integrating new customers, changing the billing process, managing an enhanced product portfolio and new suppliers. Success comes down to skilful execution and integration with minimal investment in new systems and staff.

Organic Growth

Pursuing organic growth takes time and nurturing. You may start with an idea and a portfolio of services and go off on a profitable tangent, developing new propositions with higher recurring margins in new niche markets.

It takes time to fully understand your market, where products and services exactly meet the needs of your audience and offer something above and beyond the competition at a margin that works.

Risks occur when expansion outpaces the ability to effectively manage the new business. Growth from new revenue streams can easily divert focus and resource from core business, which in itself can be risky. On the whole, organic growth may be slower but easier to manage.

Business users are consuming far more data than they used to due to remote working and the availability of mobile apps, such as Office 365 and Skype for Business. Other business applications have followed suit, creating for example business telephony apps, allowing users to make, forward and receive calls on their mobile as if it were their desk phone.

According to Gartner, there will be as many as 21 billion connected devices by 2020 generating additional mobile data traffic. SIM cards are being used inside more and more vertical devices, presenting challenges. Firstly, how can you manage a SIM card that is inserted into a device and thousands of miles away? Secondly how can you manage usage? We know there are high costs for going over data allowances on mobile phone contracts, the same applies in other devices.

According to a recent report by Zion Research, VoIP services are set to grow rapidly over the next few years, reaching £112 billion globally by 2021. The report explains that the growth is driven by the technological advancement of network infrastructure and is influenced by the rise in the number of portable devices.

The report analyses VoIP by call type with international VoIP calls emerging as the leading segment, with the majority of calls being made by computer to computer. Phone-to-phone calls are predicted to see the highest growth over the next few years. Hosted services as well as IP connectivity are set to see significant growth as businesses come out of contract and realise the cost benefits of upgrading their business telephony.

The benefits

Reduced costs with no capital outlay

Many hosted solutions are sold on a per-seat basis with no initial capital outlay, unless customers want to buy handsets upfront. In addition, many call costs are free, not just internally across multiple sites, but to UK landlines and mobiles too, with low international call rates.

Feature-rich

Features such as busy lamp fields, auto attendant, call recording, call reporting and music on hold are now more affordable on a per-seat-per-month basis and customers can tailor the solution to meet their exact requirements.

Multiple devices

Some hosted telephony solutions are available on multiple devices such as computers, tablets and mobiles, which enables customers to work remotely as if they had taken their desk phone with them.

Scalability

It is easy to add or remove a seat as required, as many hosted solutions are on 30-day contracts.

Disaster recovery

If for whatever reason there is an issue with the phone system, your office, or employees can’t get into work, you can easily re-route calls to mobiles and carry on, business as usual.

Of course our industry is awash with regulation so I have tried to focus on areas that are connected and help us think about the shape of our businesses in the future. In summary, the UK government and the EU are taking steps to increase internet speeds and reduce cost. This will accelerate the adoption of business cloud products and the Internet of Things (IoT).

1. Openreach to be legally separated from BT

Ok so this is probably not going to have much of an impact in 2017 but it is worthy of comment. Openreach has performed poorly in terms of service levels and network refresh and Ofcom have had enough. Although they have fallen short of insisting on a structural separation, this should at least see the UK’s local loop freed from the influence of its biggest customer. The best case for business and Openreach in the long term, is probably that Openreach move completely away from copper and roll-out fibre to the premises. This would enable them to sell off 80% of their property and most of their copper, funding the move to fibre. It would also result in fewer staff and a more reliable network.

2. UK government intervention with 5G and FTTP

Buried in the 2016 Autumn Statement was funding and tax holidays for companies competing with Openreach on fibre roll-out. Under pressure from the National Infrastructure Commission, the government has committed £1bn to 5G trials and is hinting at even more funding in the next budget. 4G has only been a partial success in the UK. Although it offers faster speeds and a more stable signal, it is expensive compared to a physical connection and the UK is only 54^th in the world in terms of coverage. 5G is expected to offer speeds of up to 300Mbs and the government's target is 2025 for full coverage. For further information click here. 

3. Abolition of mobile roaming charges in the EU

At present mobile operators can charge travellers to European member states up to 19 cents (14p) a minute for outgoing calls, five cents for incoming calls, six cents per text message, and 20 cents per megabyte of data downloaded, on top of their normal tariff. In April 2017 those costs will be reduced to five cents per minute, two cents per SMS and five cents per MB. Roaming charges will be completely removed by June 2017. This is a significant benefit to consumers in EU member states and is likely to lead to an acceleration in usage, particularly data usage, which is being used more and more to carry voice, video and texts. Companies with devices throughout the EU that need to be connected to the internet will no longer need to manage carriers in different countries.

If you partner with suppliers for services such as internet connectivity or hosted telephony, there is often an on-boarding process. Some suppliers insist on product and platform training before ordering portals are released, others are much more flexible, tailoring programmes and materials to suit you.

But how much training is required?

Often you are familiar with the technology and have used similar portals so little structured training is required.  You have account managers on hand to help you as you pitch, close and provision your first order and your support team is not fazed by the latest variation of services.

You may want more in-depth product training for multiple team members to gain an overview of key features and benefits and target customers. Information about competitive products you are likely to come up against in the market and which USPs to promote. Provisioning teams may require in-depth platform training and support teams may prefer more technical training around common faults and fixes.

What’s the best method of training?

Face to face

Some people prefer on-site practical training, where they can drive processes from start to finish, with guidance from experienced trainers.

Online

Others prefer online training webinars they can book themselves with access to recordings to refresh knowledge or train others as required. Many portals are intuitive with help guides, training videos and support documentation online.

Three technology trends that are likely to create opportunities in 2017

If you google this subject you will find everything from 3D printing to virtual reality. I shall focus on technological innovations that will bring business opportunities, particularly in the UK SME market and especially for the voice and data channel. In summary, as the reliability and speed of internet connections improve, so the adoption of business cloud applications will accelerate. As mobile data becomes affordable and manageable so more data SIMs will be embedded in all sorts of devices throughout the world.

The speed and cost of internet connectivity

The real cost per MB of data decreases every year and it is usually only inefficient markets and effective monopolies that keep prices high. Last year, Vodafone hit out at what it perceived as BT’s excessive profit-making from Openreach. Vodafone were able to produce figures purporting to show that BT made excess profits of £1bn from regulated services in 2015, equalling the amount set aside by the government for digital infrastructure in the Autumn Statement. As discussed in previous blogs, Ofcom’s intervention to separate Openreach from BT is likely to lead to a more progressive strategy. Together with EU regulation of the mobile networks this will cause dramatic reductions in the cost of internet and faster, more reliable services over mobile and fixed connections.

The cloud

In 2005, the front page of Comms Business depicted a gravestone on which was inscribed “RIP PBX”. It was more than 10 years before the first failure of a major PBX manufacturer but cloud voice is now established as first choice for SMEs needing a phone system. The market leader, Broadsoft, has around 15m seats installed worldwide – more than all the other vendors combined. Whereas UK business once lagged the world in cloud adoption, as internet connectivity speeds and reliability have improved so UK SMEs have caught up. Today around 80% are using at least one cloud application in their business.

I recently read an article about marketing in the channel. Interesting points were raised about strategic planning and consistency. Aligning marketing plans with business plans and playing the long game were cited as being key. Agencies and suppliers were offering marketing support to help resellers make the most out of funding and materials available, but how effective can they be in isolation?

On the vendor/supplier side you want to create scalable programmes that are easy to manage with measurable ROI. Resellers want hot leads, new customers and increased revenue.

The challenges

The two biggest challenges for marketing are setting expectations from the outset and gaining collaborative commitment throughout the business. MDs are often attracted by the prospect of receiving new leads without committing time or resources. They hope for quick results and disappointment can turn to dis-interest.

Integration

Marketing doesn’t stand alone. It needs to be integrated into core business strategy. Companies that have grown well in the channel with recognisable brands have not only integrated marketing plans with the core business plan but also understood the needs of the market. They have packaged, priced, promoted and supported solutions profitably to meet these needs, often investing heavily to do so. The senior management team are as focused on leads as they are on opportunities and marketing statistics are measured in the same way.

Social trends generating opportunities in 2017

Of course, there are many social trends we could talk about here. I have chosen three that relate to business and are connected. In summary, there are more companies starting up in the UK and fewer of these are failing. The working environment has changed and continues to change, assisted by technology and a more flexible approach to working practices.

Businesses starting up 

In 2016 there were 5.5m businesses in the UK up from 5.4m in 2015 and 5.25m the year before that. 99% of these business employ fewer that 250 people and 96% fewer than 10 people. The proportion of businesses employing any staff at all has been stuck at 24% for the last 3 years and down 1% compared to 2013. In 2015, 383,000 businesses started trading and 252,000 businesses ceased trading. Apart from a small spike in 2009 the business death-rate has always been around 10% however, the difference, 131,000 in 2015, is the largest since records began.

The prominent trend is for very small ‘freelancers’ working in cooperation with each other or for larger organisations. They have very low start-up costs and tend not to directly employ people. Consequently, they are less likely to go bust in slow periods. In 2013 women constituted only 16% of UK board directors and by the end of 2015 this had increased to 26%. This could either mean that more established companies are appointing women to their boards or that most new businesses in the UK are being started up by women.

Location independent working (LIW)

At the end of 2015 1.5m workers in the UK stated their primary place of work was not the office - up 20% in a decade. Many would have expected this to be higher but until now technology and acceptability have applied friction to this trend. Some would say that cloud technology is essential for productive LIW and UK business has been slow to adopt the cloud when compared to business in the US. With fast internet connectivity widely available and the growth of inexpensive reliable business apps, the brakes are off and we can expect LIW to accelerate in the next few years.

Be the bearer

10 years ago we saw demand for white label managed broadband. Traditional telecommunications providers decided to sell own-branded internet connectivity. Their objective was often to win future hosted telephony business running over their data connection. They were billing and supporting new revenue streams, increasing ARPU and the potential value of their companies.

Today we are seeing the same trend with managed mobile data. IT companies are adding fixed and mobile data connectivity to their portfolios to act as a conduit for the sale of hosted services. Their objective is to support devices and applications connected to the internet.

Demand

4G routers are being used as primary connections where broadband service is poor but also for pre-Ethernet connectivity and Ethernet back-up. Mobile data SIMs are being fitted in many gaming machines, vending machines, monitoring devices, sensors and ATMs as standard. Every day manufacturers and service companies are finding new uses for mobile data and as we accelerate towards 5G this is unlikely to slow down.

SMEs are demanding faster, more competitive access to the internet, whether that be wired, wireless or 4G. Services are viewed as a commodity so businesses want to know what is available at what speed and who has the best deal. Partnering with companies who have multi-carrier quoting tools and experience working with the carriers, is essential to winning the business.

Mobile data

Mobile data has its own unique set of challenges. Managing usage is essential to avoid bill shock. Partnering with companies that have portals to allow you to manage vast estates of data SIMs at a touch of a button, will help to grow this revenue stream.